However, absence of change in PFY and VFY duties will hit the polyester industry hard. Most of the polyester players were waiting for the budget before taking a decision on future course of action. Now with the government deciding against reducing duties, there is every likelihood of these firms closing down their operations. "Either closures or takeover by majors like Reliance can be witnessed in the months to come," an analyst with a leading research firm said.

But polyester players engaged in the manufacture of NFY will at least be able to weather the storm, say industry watchers. Companies like Baroda Rayon and Nirlon Ltd manufacture this product. Excise duty on nylon filament yarn has been reduced to 25 per cent form 30 per cent.This will soften prices of this yarn benefiting nylon-saree weavers and fishing-net manufacturers.

The budget has little to offer to the textile industry, which has been pleading for major policy initiatives. Of course, the long-pending demand for a cotton-technology mission has been met and the nylon filament yarn sector which has all along been neglected has found favour with the financial pundits. The decision to reduce the excise duty on NFY from 30 per cent to 25 will reduce the burden on players, who are already languishing under a severe liquidity crunch.

Contrary to world trends, capacity of the textile grade nylon filament yarn industry is stagnating and production is on the decline.

The market for NFY in India has shrunk mainly due to unfavourable fiscal policies vis-a-vis other competing man-made filament yarns like PFY, VFY and PPFY. The downward trend is already visible and in the current year it may fall to 30,000 tonnes.

While customs duty on caprolactum has been brought down to 25 percent from 30 per cent to bring it on par with DMT, PTA and MEG, all these will be effectively levied higher duty at 33 per cent due to 8 per cent additional non-modvatable levy on imports. "Though this would raise landed cost of imported PTA, it will still be below Reliance PTA prices" a market observer said.

Also import duty on paraxylene would be marginally lower at 13 per cent, against 15 per cent levied last year due to an additional 8 per cent duty. Hence, the paraxylene imports would not be much cheaper for Reliance which imports 50 per cent of its paraxylene requirement.

Higher cost of PTA and DMT should have made polyester fibre and yarn costlier, but the price rise is unlikely because of a dull market condition, according to yarn broker Kirti Kapadia. The polyester yarn market is expected to remain steady.

The import duty on wool-based apparel has been brought down to 20 per cent from 25 per cent while imports of machinery for wool and viscose staple fibre would be allowed at a concessionalrate of 10 per cent. This should give boost to woollen sector.